The present ruling is concerned with a double appeal to the Supreme Court, with Israel Aircraft Industries appealing a waiver given to Israel Fried of court filing fees for the filing fee for first million shekels claimed, and Fried appealing the decision that IAI does not owe him 1 billion US dollars. It is the latest and maybe last battle in a long running war between an employee and his employer over what was alleged to be service inventions made in 1979-1988 for satellite launchers.

BACKGROUND

In his attempt to get thrown out due to the “new evidence”, the original ruling that his patents were service inventions owned by Israel Aircraft Industries, Fried sued Israel Aircraft industries for 1 billion dollars, alleging 34 instances of fraud.

On 27 May 2018, Judge Shilo, the registrar of the Tel Aviv District Court (Judge Shilo), absolved Fried from paying the filing fee, due to his financial situation. Israel Aircraft Industries appealed this ruling, and on 2 January 2019, President of the District Court, Judge Shevach ruled that despite the wide discretion that the registrar has in such cases, it was fitting to reconsider that ruling. Judge Shevach ruled that there was a final court ruling against most of Fried’s claims, and this affected the likelihood of him prevailing. He noted that it was unlikely that Fried could ever pay the court fee for filing a statement of case for a billion dollars compensation, even if his financial status improved, and the amount claimed was very large indeed. He thus ruled that Fried could amend his submission and could sue for 1 million shekels without paying the requisite fee to the court, but would have to pay the requisite fee if suing for larger sums.

Israel Aircraft responded by arguing that the partial dispensing of the fee was against one of the purposes behind filing fees for court actions, which is to prevent people filing ridiculous lawsuits, and argued that in cases where there is no basis for the lawsuit, there is no reason to waive the filing fee. Fried countered that he had not yet introduced his evidence into the record, and that he had evidence which substantiated his claims and there was no final ruling in this case. He noted that the charges were for willful defrauding of the court which was a different charge from those previously brought, and so there was no previous ruling. Furthermore, he alleged that from Israel Aircraft Industry’s response to the charges made, it is apparent that the case is a good one. Fried claims that he had only sued for a fraction of the compensation to which he was entitled, and asked that the District Court ruling be reversed and that Israel Aircraft Industry be made to pay a billion dollars.

After reviewing the case, Judge Fogelman ruled that the District Court Ruling does not raise any special considerations and that no further consideration is needed to prevent a miscarriage in justice. Under Section 407a of the Civil Court Procedures 1994, Judge Fogelman ruled that Fried’s charge that IAI pay one billion dollars compensation and IAI’s appeal against waiving the fee for the first one million shekels are both rejected. Both parties will pay their own costs.

Request to Appeal 838/19 by IAI represented by Richard Luthi and Request to Appeal 859/19 by Fried, unrepresented, both dismissed by Judge Fogelman on
13 February 2019, with both parties to pay their court costs.

Background

In a long-standing fight between Israel Fried and Israel Aircraft Industries, the courts considered that patent applications filed by Fried in his own name and relating to technology for launching the Ofek and Shavit satellites, belonged to Israel Aircraft industries (IAI) and not to Fried, a former employee.

Fried submitted three sets of Israel and US patents applications in his name, for inventions relating to launching satellites, but these were ruled as belonging to IAI and were based on technology developed in 1979-1988 by Israel Aircraft Industries, with Fried admitting that until 1983 he had worked on this project. Whether or not Fried is indeed the inventor is immaterial as, even if so, the invention is considered a service invention and is owed by Israel Aircraft Industries. However, the court ruled that IAI was obliged to reimburse the costs Fried incurred in filing and prosecuting the patents. That ruling was appealed to the Supreme Court and in Appeal 8730/96 Fried vs Israel Aircraft Industries ltd. p.d. 55(3) 49, 21 August 2000, a triumvirate of then President Barak, Judges Rivlin and Engelhard rejected the appeal.

With Judges Barak and Rivlin concurring, Judge Engelhard ruled that this was a service invention owned by the employer. The decision further lays out the conditions under which the employer ignoring the employee’s communications regarding a service invention can be considered as indicating that the employer has no interest in its rights. The employer is entitled to the protection of knowledge and trade secrets due to the trust relationship between employee and employer.

Fried filed the patent applications himself and apparently, to the surprise of Israel Aircraft Industries, obtained a US patent (which Judge Engelhard considered may well not have withstood a validity challenge in court, but nevertheless has a presumption of validity based on having issued).

In that previous ruling, the Supreme Court established that Israel Aircraft Industries could use the patented technology for their own purposes, as it was theirs by virtue of it relating to a service invention, and they could also sell technology based on the patent. If, however, the patent itself were to be licensed or traded, then Fried would be entitled to a refund of the money he had laid out in the drafting, filing and prosecuting of the patent due to considerations of Unjust Enrichment.

The patents in question are IL 85925 and IL 85926. It is difficult to say much more about the original ruling as its publication is highly censored; presumably for security reasons.

Some years later, Fried requested that the original ruling be cancelled based on alleged new evidence that IAI had defrauded the Judge, and on 15 January 2016 the Tel Aviv District Court under Deputy President Dr. Modrick dismissed the appeal, throwing out the submission since the court felt that within the limited window for having a ruling canceled, they did not consider that Fried has submitted ‘significant new evidence’ or evidence that can undermine the assumptions and purposes of the arbitration that the District Court had considered. Based on this understanding, it was felt reasonable to accept IAI’s response and to reject the cancellation request out of hand.

That ruling was the subject of another Appeal to the Supreme Court. The Appellant, who was not represented, submitted that after the first decision, he had found additional evidence that IAI had forged the protocol and intentionally defrauded the District Court. Fried alleges that this evidence is sufficient to overturn the original ruling. IAI relies on the District Court ruling that establishes that there is no additional evidence which could not have been submitted in earlier proceedings. Furthermore, the evidence does not show fraud, and does not show that the appellant has rights in the technology in question.

After reviewing the Statement of Claims and listening to the parties, in a hearing, a triumvirate consisting of Judges Fogelman, Shoham and Bron ruled that there was no place for rejecting the factual findings of the District Court, the factual findings support the legal ruling and there was no legal error in the ruling that justifies a further appeal. The District Court had rejected the case brought before it after considering the new evidence claimed by the appellant, and the Supreme Court did not see that there was a mistake in its conclusion. In light of all this, that case was thrown out under Regulation 450(b) of the Civil Court Procedures 1984.

By all accounts and accounting methods, Fried had his day in court. The patents in question have long lapsed. If they were not licensed whilst in force, it is unlikely they will be licensed now. So Fried is really trying to get compensation from Israel Aircraft Industries for the manufacturing of this technology for the Israel Defence Forces.

I suspect that, if there was any merit to his position, Fried would have found a litigator willing to work for him on a contingency based on success. Had Fried won, this case would have made headlines well beyond this blog.

There have been a number of rulings regarding service inventions and compensation for the inventor that have been reviewed in this blog. See:

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